The New Financial Service Clause: A Window for Financial Innovation or a Pandora’s Box for Financial Regulation in China?

The positive-list and negative-list modes of financial regulation differ in terms of which sectors are open to foreign services and suppliers.In the positive-list mode, only the listed sectors are accessible to foreign entities, whereas in the negative-list mode, all sectors are open except for those explicitly prohibited by law.Recent trade agreements such as RCEP, CPTPP, and USMCA have moved away from positive-list mode, especially in financial services regulation.While they do not adopt the negative-list mode either, they introduce new financial service clauses that facilitate market access for innovative financial products.These agreements also serve as a benchmark for opening up other sectors.They will continue to offer financial products, but their product types and transfer forms will differ from current financial services.China iscreating significant challenges in establishing a correct understanding of the new financial services clause, developing a robust regulatory system, and mitigating risks associated with opening the financial services market.